| Sales Stalwarts: Top 5 IBD 50 Techs By Growth Estimates |
| By Michael Krey |
| Sat., March 26, '11 1:21 PM ET |
Don’t look now, but Q1 is over on Thursday. (And before I forget, happy 4th of July.) It does fly by, even for a quarter marked by one of the biggest natural disasters of modern times. The Japan quake will continue to have huge ramifications for many. Further down the list in importance will be its impact on a ton of companies. That’s starting to occur, but Q1 nevertheless marked the continued slow recovery from the great recession. For some companies, things are looking up. One of the best measures of that, of course, is sales outlook. Thomson Reuters polls financial analysts on their sales and profit outlooks. For the current quarter, many of the IBD 50 tech stocks are expected to do pretty well in the growth arena. Following are the tech companies on the current IBD 50 rankings of top stocks that are expected to have the biggest year-over-year sales growth in their current quarters, based on the consensus estimates of analysts polled by Thomson Reuters. They’re ranking by growth rates. 1. Baidu (BIDU). No. 4 on this week’s IBD 50, the China search leader is expected to continue to soar, as it continues to find more and more businesses in China that want to advertise online. Like Google and Microsoft-Yahoo, Baidu sells ads that are strategically placed with specific search results, so the ads are likely to be seen by people who are particularly motivated to click on the ad and maybe buy what’s advertised. Advertisers, no surprise, love that. Analysts forecast 94% sales growth for Baidu this quarter, to nearly $368 million. That’s an amazing rate, but actually down from the previous quarter, when the China juggernaut more than doubled its revenue. The stock just had another good week, buoyed by word that – like Google – it’s working on its own operating system for smartphones. As we reported in a story on Friday, the number of mobile broadband users in China jumped by 43 million in the first half of last year, to 277 million. You just don’t get that sort of growth in other markets. 2. Veeco Instruments (VECO). The maker of machines used to make LED (light-emitting diode) chips is just back on the IBD 50 this week after a long absence – checking in at No. 50, in fact – but what good timing for this particular ranking. The company’s sales this quarter are once again expected to roar, rising 83% to $246 million. That’s huge, but investors should note that it also is down from the three preceding quarters, when year-over-year revenue jumped 152%, 271% and 347%, respectively. The company’s in a good spot, though, as LEDs are used as backlighting for flat-panel TVs, among other things. LEDs use less power than conventional lighting, and last longer, so environmental factors are helping the LED push. So is China, where the government wants its companies to make and use more LEDs, and where companies are buying Veeco machines. Veeco is doing well even as LED chipmaker Cree (CREE) on Wednesday reported a disappointing quarter, saying supply of LEDs is high mainly due to generous subsidies in China, as Reuters reported. 3. OpenTable (OPEN). The company is growing fast, signing up restaurants that want to use its online reservations and other systems for helping restaurants manage and track reservations. As CEO Jeff Jordontold IBD last week, more than 1,000 restaurants now use one of the companies other products. Called Open Connect, it’s a service that steers walk-ins to clients. These clients aren’t as interested in OpenTable’s electronic reservation book, but just want more customers coming in the door. The company’s sales this quarter are expected to jump 58% to $33.5 million. That’s down just a bit from the previous quarter. Of course, since the company is still fairly small, such big revenue jumps occur more often than with really huge companies. Still, it’s quite a number, as given its No. 3 ranking on this list. On the big list, the IBD 50, it’s No. 8. 4. Netflix (NFLX). Well, not only is it a longtime regular among the Top 50, it’s getting hard to do a Top 5 techs without including this company. It’s on one of these little Top 5ers now for the fourth time this year, having made the top Internet stocks rankings two weeks ago. This time, it’s No. 7 on the IBD 50. And it’s No. 4 here because analysts expect sales to rise 43% in the current quarter, to more than $703 million. If it hits that number that would mark the sixth straight quarter of accelerating sales growth: 24%, 25%, 27%, 31%, 34% and then the 43%. Two weeks ago, we pointed out that the stock was showing signs of fatigue, which it was, breaking below the 10-week line. But it’s well above the line now, and in fact is up 22% since March 10, helped by a Goldman Sachs upgrade to buy. It does face pressure, though. Facebook has edged into Netflix-like competition via a partnership with Warner Bros. And cable channel Starz now says it will delay releasing some TV shows to Netflix for 90 days. 5. Aruba Networks (ARUN). Hey, it’s back to No. 1 on the IBD 50 for the first time since Nov. 22. And it ties for No. 5 on this list, with analysts seeing sales up 42% in the current quarter to $98.1 million. That’s down from 50% and 44% the preceding two quarters, but a pretty solid number. In February, when it reported fiscal Q2 numbers for the December quarter, the stock shot up a mere 17% that first day, on better-than-expected results and outlook. This despite the fact that CFO Steffan Tomlinson, a six-year company veteran, said he would resign effective March 31. the company is seeing big growth for its hardware and software to securely control wireless communications going in and out of corporate networks and data centers. It’s No. 2 in its sector, behind only Cisco Systems (CSCO) , the world’s largest network gear company. And, as we reported, it recently rolled out a new wireless architecture, just in time for the iPad 2. 5. (tie) Cognizant Technology Solutions (CTSH). The tech outsourcer, No. 27 on the IBD 50 this week, where it’s another longtime regular, is our other No. 5 on this list, with 42% sales growth projected for this current quarter. That would put it revenue at $1.36 billion, the most of any company in this top 5 listing. That 42% is pretty typical, but is down from 45% and 43% the previous two quarters. The company is U.S.-based but does most of its work in India, to help its clients cut costs. The stock had a nice week, and cleared resistance near 77 on Thursday. Ed Carson over at Capital Hill reviews the IBD 50's 'A-Team,' including Aruba Networks. Check out the entire IBD 50 list (subscription required). If you don’t have a subscription, you can sign up for a free trial and get full access to the IBD 50 and investors.com. March 20: The top 5 tech hidden gems March 14: The top 5 Internet stocks March 6: The top 5 software stocks Feb. 26: The top 5 China tech stocks Feb. 22: The top 5 tech earnings reporters, based on first-day pops |
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